Starbucks denies Kraft performed 'well' under distribution deal

Starbucks Corp. denied Kraft Foods Inc.'s claim that the foodmaker has performed “exceptionally well” under an agreement that Kraft claims gives it exclusive rights to sell Starbucks coffee in grocery stores through 2014.

In papers filed yesterday in federal court in White Plains, New York, Starbucks denied the central allegations of Kraft's Dec. 6 suit and said a judge should deny Kraft's request for an order barring Starbucks from terminating the agreement.

“Starbucks avers that it has repeatedly expressed its dissatisfaction to Kraft regarding Kraft's performance” under the agreement, the world's biggest coffee shop chain said in its answer to Kraft's complaint.

Kraft, based in Northfield, claims in the suit that Starbucks is planning to break the agreement and take over the business of selling its whole bean and ground coffee in grocery stores.

Kraft claims it will be irreparably damaged if Seattle- based Starbucks is permitted to end the agreement as planned, on March 1, before the parties are able to resolve their dispute in arbitration.

In 12 years, “Kraft has grown the sales of Starbucks consumer packaged goods products 10-fold, increasing annual revenue from approximately $50 million to approximately $500 million,” according to its complaint.

The case is Kraft Foods Global Inc. v. Starbucks Corp., 10- cv-09085, U.S. District Court, Southern District of New York (White Plains).